REEx Reality Check: Hudson Sounds the Alarm?But Does It Ring True for Investors?

Highlights

• China dominates 90% of heavy rare earth processing.
• China controls 80-90% of magnet production, wielding significant global supply chain control.
• The report details China’s bureaucratic tactics, including:
  • Slow export licensing.
  • Forced technology transfer in critical mineral industries.
• Western countries are developing alternative rare earth projects in:
  • TexasWyomingNebraskaSaudi Arabia

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The Hudson Institute’s (opens in a new tab) latest report, “China’s Bureaucratic Playbook for Critical Minerals (opens in a new tab),” authored by William Chou, offers a sweeping, detail-rich indictment of China’s weaponization of rare earth and critical mineral supply chains. It’s well-timed, deeply researched, and, in many places, accurately unsettling. But buried beneath the flood of facts and footnotes is a subtly ideological undercurrent investors should parse with care.

What Rings True

The core argument holds: China exerts disproportionate control over rare earth mining, refining, and magnet production, particularly for heavy rare earth elements. Hudson’s numbers align with current industry estimates—90% of global heavy REE processing, 80–90% of magnet production, and overwhelming leverage in export licensing and gallium supply.

The report also shines light on Beijing’s weaponization of bureaucracy—deliberately slow and invasive export license regimes designed to extract trade secrets, delay Western production, and coerce companies into remaining in China. The granular documentation of forced technology transfer is particularly credible, echoing concerns from global automotive and electronics firms.

The Hudson Institute is a U.S.-based public policy think tank, founded in 1961 by futurist Herman Kahn and colleagues from the RAND Corporation, originally in Croton-on-Hudson, NY. It now operates from Washington, D.C

Where It Overreaches

While the Hudson Institute provides critical clarity, its tone often veers into ideological certainty. Assertions like China’s “clear endgame” to dominate “entire supply chains” may well be strategic forecasts—but they’re presented as inevitabilities. Supply chains are dynamic, and Western reindustrialization—while slow—is real.

The framing leaves little room for nuance or unexpected disruption.

The report also presumes U.S.-led allied coordination will prevail with “clear-eyed resolve.” But recent EU hesitancy on tariffs and Japan-Germany divergence in gallium licensing highlight how easily Beijing can exploit wedges. Investors should be wary of overconfident predictions about Western unity.

Speculative Signals

The suggestion that China is favoring Germany over Japan to later “turn against Berlin” reads more like geopolitical fiction than a substantiated fact. While possible, such claims require more than anecdotal attribution.

Similarly, the invocation of Uyghur forced labor and “carbon tariff” proposals—while relevant—feels politically layered. These are critical discussions but may distract from the narrower investor question: How viable and investable are non-Chinese rare earth projects today?

REEx Guidance for Investors

For retail investors, the key takeaway is this: China’s dominance remains real, but the West is finally moving. Projects in Texas (Lynas), Wyoming (American Rare Earths), Nebraska (NioCorp), and Saudi Arabia (MP Materials and the Nevada company’s processing and magnet plans), not to mention a unit within the German government seeking large deals with Arafura, reflect real, albeit early-stage, momentum. But success hinges on synchronized industrial policy, not just patriotic resolve.

Hudson’s warning is pointed and timely. But at Rare Earth Exchanges (REEx), we go deeper, cutting through rhetoric to deliver the clarity investors need to act with informed conviction.

Rare Earth Exchanges™ — The Gateway for Investors to Navigate and Invest in the ex-China Rare Earth Supply Chain.

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